One of the major risks or disadvantages of a family trust is that it can't distribute capital or revenue losses to its
beneficiaries. As a result, should a trust incur a net loss, its beneficiaries
won't be able to offset that loss against any other assessable income that they
may derive.
Other risks and disadvantages to setting up a family trust can include:
Tax risks– tax avoidance can be a risky business
and a tax accountant should be consulted before you unknowingly get yourself in
trouble.
The name holding the
assets– the
trustee is the legal owner and this individual’s name will appear across all
documentation.
Loss of ownership of
assets– personal
ownership of property is lost when managed through a trust.
Additional
administration– this costs
time and money long-term.
Of course, with any type of legal
documentation or taxation advice, it's always advisable to consult the experts
to best understand your individual situation.
RealRenta has all the tools that a property manager has but for
less than ¼ the cost of a property manager.
Join now and the cost is less than a cup of coffee a week to manage your
rental property.
RealRenta also has a free vision, so why not check it out.
Jason Gwerder
Thursday, 22 June 2023